A month ago, the Thoroughbred Idea Foundation (TIF), a think tank that uses independent research to try and drive changes in the sport, brought to light an example of what it said was brazen quinella pari-mutuel pool manipulation at Gulfstream Park. The scheme was apparently designed to jack up the odds the manipulator would receive on winning bets placed with non-pari-mutuel offshore bookies that paid on-track prices.
On Wednesday, Pat Cummings, the TIF's executive director, told an audience at the Global Symposium on Racing hosted by the University of Arizona Race Track Industry Program in Tucson that this incident was one of more than 60 purported pool manipulations he has documented at North American racetracks since the spring.
“The reason we wrote about that particular incident was because it was easily the biggest of more than five dozen incidents that we've tracked in the last six or seven months affecting, really, a significant number of racetracks, most of whom don't seem to know any of this is going on,” Cummings said.
And in the cases where regulators and racetrack operators do acknowledge that pool manipulation exists, Cummings said, they often believe the practice is victimless, without harm to the sport, or beyond their power to change.
All of those ideas are incorrect, Cummings said in a panel discussion titled “Illegal Betting's Threat to the Racing Industry.”
“I've approached regulators across America with this,” Cummings said. “And they say, 'Well, it is handle, right?' I mean, the tracks want this money…”
Cummings trailed off midsentence, giving the impression that industry bigwigs often shrug when faced with evidence of pool manipulation (Gulfstream, however, did discontinue quinella wagering days after becoming aware of the Nov. 11 pool irregularities).    A recent report titled “The State of Illegal Betting,” compiled earlier this year by the Asian Racing Federation, exposed the proliferation of unlicensed and unregulated online horse racing and sports wagering companies. The report found the global demand for online wagering is increasing faster than industry's ability to react. The suspicious betting patterns detected by the TIF in American pools may have a connection to non-pari-mutuel bookmaking.
Wednesday's panel, which also included global perspectives from Matt Fowler, the London-based director of integrity for the International Betting Integrity Association, and Martin Purbrick, the chairman of the Asian Racing Federation's Council on Anti-Illegal Betting and Related Financial Crime, outlined some major threats and discussed what actions could be taken going forward.
But it was the presentation by Cummings–who isn't even a regulator or investigator, but is more akin to an ombudsman for U.S. wagering–that hit closest to home for most stateside racing stakeholders.
Cummings said the first fundamental step is to recognize that pool manipulation is never going to be eradicated entirely. It's not even explicitly illegal. A good chunk of it, he said, occurs with the aid of the “vast” gray-market global bet-booking business whose handle is “far in excess of the legal market, and it has infiltrated American racing. There is absolutely no question.”
Cummings gave an overview of how a manipulator might work, using show pools as an example. (If you want to read a more in-depth TIF writeup on the process, click here.)
A manipulator might bet $2,000 to show on a horse or horses who look certain to finish in the money at a track where the fields are uncompetitive and/or short and the show pools are miniscule. But instead of betting that money in the pools, he instead spreads it across a number of different offshore bookmakers in smaller increments. These are bets he intends to win, and it's important to note that the offshore outlets don't often “lay off” this money into the mutuel pools.
In the same race, the manipulator then bets, say, $4,500 into the show pool on one of the longest shots on the board, and this money does go through the mutuels, making a horse who is unlikely to hit the board based on past performances the overwhelming favorite in that pool. This bet he intends to lose–it's a business cost whose sole function is to abnormally drive up the show prices on the more likely horse(s) to hit the board that he backed with the offshore bookies who pay the on-track prices.
If the race unfolds as the manipulator envisioned it will, the hapless heavy show favorite runs out of the money, while the more talented horse(s) he backed via bookmakers cruises home in the top three, triggering something like a $21.00 show payoff.
“So they sacrificed $4,500 to win maybe $21,000,” Cummings said. “The manipulator is spreading his or her risk, likely across multiple accounts, because the offshore operator may not pay them. That's just part of the risk.”
Cummings continued: “I don't see a lot of [bettors] talking about this or noticing it. And the reason is, if you bet an even-money shot to show thinking you were going to get $2.20, and [instead] got $21.20, who's complaining?”
That's an obvious example that should stand out, Cummings said. But this pattern occurs with more subtlety using smaller dollar amounts, he explained, like when a manipulator might be content not to make a single big score, but instead routinely inflate 1-to-5 shots in the show pool so they pay off like a 4-5 shot would.
And occasionally, the horse who was supposed to be a dud wins or hits the board, Cummings said. That's when bettors do speak up and complain about the pools not being on the level, because the big long shot they legitimately bet in the mutuels returns a vastly underlaid show payout.
That can lead to image and integrity problems, Cummings said.
“You do not want a bad name associated with your product. And every time someone manipulates your pool, if it's noticed, it's bad for your product,” Cummings said.
Beyond creating bad perceptions, Cummings said, rampant pool rigging could also encourage manipulators to get a bit bolder with their actions, perhaps by spending a bit extra to bribe participants to ensure desired outcomes in races.
“If someone's willing to bet $4,500 to show in a race where the winning jockey is earning $900, what's an extra $500 to make sure they don't run in the money?” Cummings said. “Or an extra $500 to the trainer to tell the jockey to maybe be a little slow out of the gate today.”
Cummings stressed that to his knowledge, there is no current evidence that pool manipulators are reaching out to arrange fixed races.
“That's a good thing–for now. But it's out there. And it happens. And there is no reason that others might not try to copy this,” Cummings said.
Cummings explained that he's a proponent of the “best defense is a good offense” strategy to try to keep pool manipulation at bay. The industry can do this, he said, by recognizing that our pari-mutuel system is ripe for being controlled in the manner he described, and by increasing stewards' awareness and oversight so there is a better focus on pool-watching.
A fixed-odds system might be a better long-term solution. But that style of betting is not completely immune from manipulation, either, Cummings said.
Reinventing our wagering menus could be an option, Cummings said, with an eye on pruning off the low-volume pools.
“Should a track that has offered win, place and show betting for the last 60 years continue to do so when the place and the show pools only average $1,200?” he postulated.
In that case, maybe the solution is to get rid of the place and/or show pools.
The proliferation of rolling horizontal wagers on practically every race card on the continent is also a hazard waiting to happen, Cummings said, because those bets, too, draw very little mutuels action and have low base-bet increments.
“We have to rethink the way we're doing this, because every small pool is a way to manipulate the outcome, to corrupt a participant, to help exact these sorts of outcomes,” Cummings said.
Cummings said he has spoken with various groups of officials and regulators over the past year about the problem of pool manipulation.
Their reactions?
“Interested, but [there was] very little they thought they could do about this,” Cummings said.
“This falls back on track operators. It falls back on horsemen's groups,” Cummings said, pointing out that the idea of looking the other way when pool manipulation occurs is not justifiable simply because it increases handle and thus fuels purses.
“If you don't recognize it, [or] if you bury your head and say, 'I don't want to hear about it–not interested,' it's going to keep happening,” Cummings said.
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